My Lords, I tabled this debate to bring the attention of the House to a major injustice which has been carried out against a large number of women in this country: some 3.8 million women who have been impacted by accelerated changes to the retirement age. In doing so, I pay tribute to the campaign being run by Women Against State Pension Inequality, which has so effectively highlighted this major injustice. I support the campaign but I am not a member of it. I am not affected and therefore have no personal interest, but I do believe that there is a point of principle here. It is not the principle of equalising the retirement age, for there is no argument about that, and the WASPI campaigners accept that. Nor is there an argument about retiring later, given the increased life expectancy nowadays. The principle is about the fair treatment by the state of those affected by the decisions it has made. In our democracy, it is right that Parliament makes changes but it is a basic role of government to ensure that those changes are implemented effectively, efficiently and in good time and are underpinned by principles of natural justice. And it is the basic role of Parliament—of this House—to hold the Government to account for the way they implement changes in legislation and policy.
Changes in legislation going as far back as 1995 were not acted upon, in some cases, for 14 years. For women born between April 1950 and April 1955, the Department for Work and Pensions began the task of writing to them in 2009. It completed the task in 2012. It is impossible to justify a delay of this length. I do not believe that Parliament would ever allow a private pension provider to behave in that way, but we seem to think it acceptable when the Government are doing it.
As far back as 2004, the department published a report about how the changes to pensions were being implemented. At that time, it indicated that only 43% of the women affected were aware of the impact on them. In other words, the Government knew about it but did not take any steps to address it with vigour.
Many women got to within 15 months of their retirement and at that point were told that they would have to work for up to another six years. During the summer, I met someone in exactly that position. She had retired what she thought was two years early to help her daughter with childcare and to assist with the care of her 90 year-old father. Having done so, and based her planning on a two-year wait until her pension would arrive, she was then told that she would have to wait an extra five years.
In this and other stories like it, the Government have failed a generation of women very badly indeed. This is a generation many of whom spent years at home looking after children and therefore have very poor pension provision to start with. Figures show that some 33% of men will rely solely on a state pension, while 53% of women will do so. This is a generation many of whom left school at 15 and worked all their lives with a significant gender pay gap; a generation who did not receive maternity leave and were not entitled to long-term sick pay until later on in their careers; a generation many of whom have caring responsibilities for parents in their 80s and 90s, and are helping their children with childcare duties.
Ministers have suggested that retraining and apprenticeships offer a way forward for those women, and sing the praises of jobcentres in helping to find new opportunities. Of course, if that is the route that someone wishes to take, I would not stand in their way, but the idea that this is a suitable option in the majority of cases is frankly risible. Jobcentres are closing all over the place. Good luck trying to find an employer who will take on a recently retrained 61 year-old. And what on earth happens to the elderly parent or child who is dependent on you for their care?
If all this was not bad enough, the whole issue continues to be handled very badly. Freedom of information requests have revealed that the DWP has received more than 4,500 complaints from WASPI women. Of these, six have been resolved. Three case workers have been assigned to this review. This is just adding insult to injury. We are recruiting thousands of civil servants to deal with Brexit, but cannot resource this task properly.
I am sure that other speakers will provide graphic illustrations of the impact these changes have had and the way the mishandling of this issue has affected individual women and their families, but there is one particular group that I would like to focus on this evening: women who have moved abroad to retire. Some have done so for health reasons, some to be closer to family, some because they worked abroad before they retired—in other cases, simply because they chose to move, as they are entitled to do. Many of these women made their decisions based on receiving the state pension at the age of 60. One woman told me that just after she moved, she discovered that her pension age was 63, not 60. She reorganised her finances to manage the three-year gap, only to be subsequently told that it would be 66.
These issues are common to all WASPI women, but those living abroad face particular challenges. For example, state pension age is also the point where these women would receive an S1 form giving them entitlement to reciprocal health care, so this is now an added financial burden. What the Government describe as mitigation—bus passes, apprenticeships and so on—are of absolutely no value if you live outside the country.
Another woman told me: “Before we left, my husband checked that we had enough years to qualify for a full pension and was assured we had, but I’ve now been widowed and I’ve been told I haven’t paid enough and that my rate will be reduced.” Of course, for women who have retired to EU countries, there is now the extra anxiety of not knowing what the ultimate agreement will be about their rights when, and if, we leave the EU.
I will not ask the Minister whether there has been an impact assessment on this, but I have one particular and specific question. Currently, pensions to those living outside the EU are frozen at the point of retirement, while those who live within the EU are treated the same as if they lived here. Post Brexit, will British pensioners in EU countries be treated as they are now, or will their pensions also be frozen? If British pensioners in the EU receive updated pensions, what plan do the Government have for those who have retired elsewhere?
We all agree that there is a crisis of trust in politics and politicians. Is it any wonder, when an issue of this importance is subject to ludicrous party-political bickering in the other place? The truth is that all political parties are in part culpable here, and we have a duty to work together to put it right with workable and fair transition arrangements.
This is impacting most seriously on poorer female pensioners. Research has shown that poverty levels in women aged 60 to 64 has risen by 6.2% as a result of these changes. Let us be clear: if these women are poor now, there is a likelihood that they will remain poor right the way through their retirement, and that these numbers will grow unless the Government act.
The Government should concede that the administration of these changes was fundamentally flawed and come up with proposals to put right this wrong. It is not about reversing the changes to pension age, but recognising that where implementation is flawed, the Government have a duty to come up with proposals to protect those impacted by those flaws. The Institute for Fiscal Studies report published in August estimates that the changes in women’s pension age have boosted government coffers by £5.1 billion. Surely to goodness, some transitional help is affordable and must be afforded.
My Lords, I congratulate the noble Baroness, Lady Scott, on raising this issue, and all the women who are attending the debate—and by that I imply a criticism of all the men who have decided to stay away.
One day they will make a film about this issue. It will be a British film, made on a small budget and inspired by a sense of outrage that such an unfair treatment of British women could have persisted into the 2010s. It will join a fine tradition of films which have put on record the past struggles women have had to be heard. Recent ones include the 2010 film “Made in Dagenham” and the 2015 film “Suffragette”—both subjects that the establishment of the day hoped would go away once the fuss died down. But it did not, and the protests of the women finally won out.
The WASPI women are in that tradition. Indeed, their many branches wear the suffragette colours with pride. They persist in protesting the unfair treatment that women born in the 1950s have been given by the Government’s pensions policy, as expressed with increasing severity in the Pensions Acts of 1995 and 2011. The film of their story will detail how, in trying honourably to remedy one inequality—bringing women’s and men’s retirement ages into harmony—the Government of the day perpetrated another, subjecting 2.6 million women to unexpected delays to their pension dates, with too little warning, and throwing many of them into genuine hardship.
The film will show, with perhaps only slight exaggeration, bumbling officials—I suggest Jim Broadbent or Hugh Bonneville—overwhelmed with detail about changing demographics and passing on conflicting advice to the Ministers concerned. A lead role in the film will be the Minister of State at the Department for Work and Pensions, Steve Webb, who will be shown as well-meaning but confused—a part for Hugh Grant, I think. Steve Webb was the longest-serving Minister at the DWP and effected important and successful changes, such as the triple lock on pensions that benefited many and continues to do so, and the automatic enrolment by businesses of their workers into pension schemes—all fine reforms by a man whose word we could surely trust.
That being so, Steve Webb will have written his own script for the film in June 2015, after he had left office and lost his parliamentary seat. He told the Institute for Government:
“There was one very early decision that we took about state pension ages, which we would have done differently if we’d been properly briefed, and we weren’t … we’d put an announcement out … and we just hadn’t thought through what we were doing … we had to make a difficult decision … and the implications of what we were doing suddenly, about two or three months later, it became clear that they were very different from what we thought … so that’s a decision that we got wrong”.
Those are the Minister’s own words. Incidentally, Steve Webb also spoke of the fine support he usually had from his civil servants—“very good people”, he called them—but not on this occasion.
The film will show Steve Webb going, cap in hand, to David Cameron, leader of the coalition Government in which he served, and asking for some money back from the savings that his department had made. He needed this money to soften the blow but came up against George Osborne and the steely men of the Treasury—male judgments being passed on women’s lives. He got only a third of the £3 billion he asked for and thus was the crisis launched.
Like any good film, this one will fill in the background: the genuine poverty that WASPI women are suffering because they were not given time to plan. We will see piles of brown envelopes stacked up, not delivered or left unopened at the wrong addresses. I have had arguments made to me that the news of the changes was in fact dispatched to the women concerned. Perhaps the film will show us the many ways the post can go astray and publicity campaigns be overlooked. We will see women who were facing retirement at 60 suddenly trying to extend their employment and being refused, trying at the jobcentre and suffering the humiliation which at their age is deeply distressing for them.
I can imagine the story being told of one such character—let us say she will be played by Julie Walters. She left school at 15, has worked all her life since, paying the contributions expected of her from her meagre wages, and now she is bewildered that the world is denying her the support she had always been led to believe was hers by right. We can imagine the brutal cross-examination at the jobcentre—Simon Russell Beale in a cameo role, I think—and the requirement to seek out employment before she becomes eligible for any benefit to ease her poverty.
We now live in a time that is finely tuned to the lives of women and how, simply because of their gender, their experiences of life are different from those of men in so many ways—equal pay, sexual harassment. We are increasingly conscious that simply because you are a woman you should not be singled out for particular treatment—of whatever kind. There is a groundswell of popular feeling that this should not be so. The WASPI women were born long before the equal pay legislation and well before the Equality Act. They have lived their lives under the disadvantages that were once the lot of all women. The pensions legislation perpetuates that disadvantage—no adequate notice, no time to prepare and no adequate transitional arrangements to ease any hardship. The various suggestions that have been made for transitional arrangements do not meet their needs. They now ask to meet the department to discuss and resolve this continuing and shameful situation.
“to improve transitional arrangements for women born on or after 6 April 1951 who have been adversely affected by the acceleration of the increase to the state pension age”.—[
The film poster might well read: “They were old. They were women. They were condemned to be poor”. I appeal to the Minister to make sure that this does not happen.
My Lords, I respectfully remind noble Lords that this is a timed debate and the noble Baroness, Lady Altmann, is going to speak in the gap, so we need to take 30 seconds off the other speakers. If noble Lords could please stick to the time, that would be helpful.
My Lords, I am grateful to the noble Baroness, Lady Scott of Needham Market, for initiating this debate and for setting out so clearly why more than 3 million women have been treated so unfairly. Those of us who have been fighting for women’s equality for most of our lives support the equalisation of the state pension age and recognise that many women will benefit from the new flat-rate state pension. The subject of this debate is a group of women who have fallen into the gap between two safety nets: certainty about when they retire and relative certainty about their future income. I say “relative” because the old system counted a husband’s contributions as part of the woman’s pension and assumed no divorce.
“People need at least ten years notice of change and change itself should be limited to once a decade”.
The women born in the 1950s did not receive this kind of notice. The decision taken in 1995 to set in train the equalisation was a fair decision but was not communicated in anything like an effective way. However, the real robbery took place in the 2011 legislation, which brought forward the year when the state pension age would increase to 66, from the planned date of 2026 to 2020. Even though after a huge outcry the Government slowed down their proposed timetable, it still meant that 2.6 million women were adversely affected.
It is not the equalisation of pensions that we are protesting about but the change in government policy which accelerated that change, combined with poor communication by successive Governments to the women affected. The acceleration meant that women did not have sufficient time to mitigate the potential losses, even if they were aware of the changes and in a position to do. One woman who estimated that she had lost £40,000 said that “no man has suffered this mismanagement of expectations”. Another asked: “Is it too much to ask that women like this are compensated for a contract that has been unilaterally broken with insufficient notice?”. The Institute for Fiscal Studies said that,
“household incomes for women in this age group have fallen by around £32 per week”.
For poorer households, the decline represented 21% of income.
I am sure that the Government will talk up the benefits of a flat-rate pension for those women who were not able to collect sufficient national insurance eligibility because of caring responsibilities and that the Minister will refer to the triple lock, the need to recognise demographic changes and the equality between the sexes. If she is very brave, she will talk about a lost generation applying for an apprenticeship. But we are not talking about any of these changes, nor do we wish to turn back the clock. We are talking about a different generation of women who did not have the same rights of flexible working and occupational pensions. In many cases, they did not accumulate sufficient independent wealth to maintain a decent standard of living on retirement.
These women had a raw deal on occupational pensions as well. When I started work, I was excluded from the occupational pension scheme because of a two-year eligibility requirement—and I was one of the lucky ones, because at least I was able to join eventually. Others were excluded because they were part-time and could not join until the law was changed in 2000. Others again were barred because they did not earn enough. All of us ended up with an occupational pension which was lower than we had the right to expect, and even now part-time workers are not automatically enrolled if they are deemed to earn too little. This continuing discrimination against the low-paid could be the subject of another debate.
It is difficult to appreciate today that married women who stayed at home to raise their families and care for their elderly were entirely dependent on their husbands’ state pensions. Until April 1977, the married woman’s stamp was offered to working women, most of whom did not appreciate the impact it would have on their state pension. The lower rate was encouraged by most employers and seized upon by low-paid women. When the lower-rate option was no longer offered, what is not always remembered is that the women who were already paying the reduced stamp were allowed to continue to do so. The age cohort we are talking about in this debate would then have been about 25 to 30, so were probably already working. It was a different world and they are paying the price for seeing one system swept away without benefiting from the new system.
In 1998, when I was a member of the Low Pay Commission, we discovered that women who earned too little to pay national insurance did not even appear on any statistics and could not be counted as a group who might benefit from a statutory national minimum wage. That was later rectified, but it was par for the course that low-paid women were undervalued and not regarded as a significant part of the labour force. This was not in 1850 or 1950 but in 1998.
Finally, the Women Against State Pension Inequality campaign is asking for a non-means-tested bridging pension to provide an income until state pension age and compensation for those women who have already reached state pension age. They are strongly supported by my former union, UNISON, which represents many of the women in this group. I urge the Minister to use her good offices to persuade the Government to change their policy on this.
My Lords, I thank the noble Baroness, Lady Scott, for bringing this important debate before us tonight. The whole debate is not around whether there should be an increase in the state pension age but about how much notice people are given for such changes. There are many women who, throughout their working life, expected to receive their state pension at the age of 60 and were shocked, when they approached that age, to find out that the rules had changed.
It seems that the Department for Work and Pensions wrote to the women affected by this but did not contact them until 2005—10 years after the 1995 changes. Many women said that they did not receive such a letter. With such a big change to the state pension age, it is so important that people are given enough notice of any changes so that they can properly plan and save for their retirement. The Department for Work and Pensions needs to do much more to ensure that people affected are contacted about such changes to state pension age as early as possible.
“The 2011 Act, which I was responsible for, did not add any more than 18 months to people’s pension age, typically 12 months. But when we did write to people—and we did write … to tell them what changes we have made—this was the first time they had heard about the first changes. So instead of me writing to them to tell them there was an extra year on the pension age, we were effectively telling them they had six extra years added to their pension age, which is of course why they were outraged”.
There is a dispute about how many women were born in the 1950s, but it is estimated that there were at least 2.5 million. These women have paid into the system in the expectation that they would retire with a full state pension at the age of 60. Many were—and still are— completely unaware of any changes to this, despite the various Acts of Parliament over the years, owing to the lack of correspondence by the Government of the day. Without time to prepare and make the necessary alternative arrangements, many women born in the 1950s have been left in financial despair. They need reasonable transitional arrangements in place as soon as possible, to allow them to enjoy the retirement they have earned.
“Many women born in the 1950s have already celebrated their 60th birthday, whilst the remainder approach theirs over the next few years. But plans of retirement are on hold for these women as they face an uncertain future. The lucky ones are having to work for longer in jobs that they are still able to hold onto. But for others, the physical nature of their jobs is totally impractical for women of their age. I have heard first-hand accounts: of women suffering from trying to keep working in jobs they are no longer able to do; of women having to sign on as unemployed for their first time in their lives, because they are unable to find jobs or are no longer able to work in the jobs they had; of women going without essentials like food and heating as they just can’t afford them without the pension they had expected; of women selling their homes or borrowing from their elderly parents or children just to make ends meet and avoid spiralling into debt”.
That spells out clearly what is happening to the 1950s women. How are they going to continue to work in jobs which they are not physically fit to do? It is highly unlikely that employers will keep them there if they cannot do their job. These women accept that the pension age is increasing, but they have not been given appropriate time to prepare for that. The Government’s poor handling of the changes has left many in financial hardship.
These women had planned their future. They had worked hard and they naturally expected to be rewarded with a full pension, but now they face a different predicament. I ask the Minister to listen to the women who have been campaigning hard on this matter. Will she meet them in order to understand their concerns? I am not sure whether any Minister has met any of the campaigning groups. Will the Minister give a commitment tonight to meet them in order to understand their problems and, I hope, to find a resolution to this very serious matter?
My Lords, I am grateful to be allowed to speak in the gap as this is an issue close to my heart. The 2010 coalition agreement promised there would be no changes to women’s state pension age before 2020, but a few months later Ministers decided to start increases from 2018. I tried to persuade the coalition Government that increasing women’s state pension age a second time before the original 1995 changes were finished was wrong. I still believe that. The implementation has caused regrettable injustice, distress and anger, and I hope my noble friend will forgive me for highlighting these issues in case she is not fully aware of them.
First, no man faced an increase of more than one year while these women, who generally have much lower private pensions and who had been disadvantaged in state and private pensions throughout their lives, had increases of up to a year and a half on top of the previous three, four or five-year rises. Secondly, women were given only five to eight years’ notice while around the same time the Government announced that it would not be fair to make any changes to the pension arrangements of public sector workers within 10 years of pension age. Such double standards were difficult for many women to accept. Thirdly, and most importantly, many women did not know about the 1995 changes, so in 2011 while Parliament believed it was increasing their pension age by up to one and a half years, some women effectively faced a delay of up to six years.
I also did not realise in 2011 that the Labour Government from 1997 to 2009 did not make sure that women knew about the changes in 1995 so that they could plan for the delay. Even worse than this, many 1950s-born women were lulled into believing that their pension age would be 60. Around 2004, the department wrote to many of these women to tell them how much or how little state pension they were in line for, but those letters did not tell them that their pension age would not be 60. As a letter about their state pension did not mention their pension age, women would naturally assume that they would get it at 60, like every woman they had ever known. Even in 2015, some official websites still listed the women’s state pension age as 60.
I know this is a difficult issue, and I sympathise hugely with my noble friend. Believe me, I understand how uncomfortable her situation must be, but I hope that we can find a way to help the good women who are facing real hardship and show our understanding of the position in which they find themselves.
My Lords, it is a real pleasure to follow the noble Baroness, Lady Altmann. She has done so much in this area, a lot of it behind the scenes and a lot in public. She is a knowledgeable and experienced hand in these matters, and I am pleased to follow her speech.
I am grateful to my noble friend for introducing this debate. I wish to add just one or two contributions. The first thing I want to say to the Government is that this is quite a modest request. The case is powerful, but we are talking about further consideration. In her film the noble Baroness, Lady Bakewell, would make the point that the Government are waiting for this to go away. I do not think this will go away. I will certainly come to see the film. She needs to add a villain from the Treasury, and I cannot think of anybody sufficiently obnoxious off the top of my head, but I will send her a note in the morning. I think this was a mistake that was made by the Treasury in 2011. I was around at the time—I had been chairman of the Select Committee on work and pensions—and I think Parliament did not understand the consequences what it was doing when it passed the 2011 Act.
This is a serious act of omission. It has been done by successive Governments. It is right to say that Steve Webb was in place at the time, but I think his hand was forced away from the 1995 decision, which was sensible, to the 2011 decision, which is now causing severe problems. The DWP is very good at creating policy but absolutely hopeless at delivery and implementation. I do not say this against the professionals in the department. Some of us are old enough to remember the controversy when housing benefit was introduced, then there was the Child Support Agency and now we have universal credit. We really must learn some lessons about some of the terrible mistakes we make in the translation of policy into delivery.
I was clear in 1995 from the report of the Pensions Commission that 15 years’ notice was the minimum required and that these changes should be made only once every 10 years. I was certain that that was a safe policy, that the journey had started and that things would turn out well. Since then it has to be said that the context has completely changed for everybody, but particularly for these women who have lost these pension years. With the economic crisis of 2008, and if we go forward with the Government’s policy of withdrawing from the European Union, growth levels and the family income and wages available to some of these households in retirement will get worse. There has been increased age-related morbidity across the generations and we obviously have a bigger population. The future is not getting any easier in terms of the economic background.
The point I really want to make more than any other is that the totality of the savings over the middle term, over a number of years, is £30 billion. Steve Webb asked for a proper sum of money to deal with this problem but only got a third of what he needed. It seems to me inconceivable that over a longer period of time, with that total saving of £30 billion, this cannot be mitigated in transition. Whether the WASPI campaigners are right to not settle for anything less than the full compensation—if I was them I would do the same—there is a strong case for looking at a negotiation with the Government that would settle for somewhat less. However, they cannot do that because the Government are not talking to them. It seems to me that the combination of the fact that £30 billion is being saved over time with the fact that the Government will not even discuss or defend their position—they will do nothing of the kind—is contrary to natural justice. As has been said in some of the powerful speeches from colleagues, it is the handling of the issue that makes this all worse. People are getting really angry for understandable reasons.
I support the WASPI campaign. It is deliberately going through the ombudsman, which I hope will bear fruit and lead to the further consideration that this Question this evening is calling for. The Government need to accept responsibility. This was a serious act of omission. I do not think the House of Commons in 2011 fully understood what it was doing, and there is a very powerful case now for further consideration of the WASPI claim. If the Government are not prepared to see the representatives of those who have lost these significant sums of money, their campaign will be supported in Parliament. The Government should not expect this to go away. I do not believe it will unless they come up with something sensible to put in place to get the transitional protection that the WASPI women are looking for.
My Lords, I am grateful to the noble Baroness, Lady Scott of Needham Market, for providing a further opportunity to focus on this important matter. We have had some powerful women’s speeches this evening, as well as one from the noble Lord, Lord Kirkwood. If I disagreed with anything in them, it was that I do not think we should allow Steve Webb to lay claim to auto-enrolment—although that is perhaps for another day.
Changes to the state pension age in recent times have involved both its equalisation for women and men, to age 65, and its increase for both men and women, currently to 66. The former was achieved by the Pensions Act 1995; the latter by the Pensions Act 2007 and the Pensions Act 2014, but primarily by the coalition’s Pensions Act 2011. The 2014 Act put the uprating of the state pension age on a statutory footing, linking the SPA to increasing life expectancy. John Cridland’s independent review recommended an increase to 68 in 2037 to 2039, which it is understood the Government have accepted. That is some 20 years away, which should enable ample time for effective communications and information activities.
The 2014 Act also adjusted the increase in the SPA to 67 to between 2026 and 2028, so the clock is ticking for awareness-raising for individuals due to be affected by this change. Leaving aside the process involved, we continue to support the principle of equalisation, which largely followed what was happening to occupational pensions and EU developments. Similarly, we support the principle of periodic increases to the SPA to reflect changes in longevity and the intergenerational fairness which this ensures, as well as to support sustainability.
The problem being confronted in this debate is the basis and manner in which the earlier changes to the SPA were introduced—the 1995 equalisation process and the 2011 acceleration of the state pension age to 66, with subsequent amelioration of the latter. The current position is that women’s SPA will reach 65 in November 2018, but increase more slowly to 66 by October 2020. The situation is therefore that women born between
The WASPI campaign, as we have heard, is not disputing equalisation but complains about how all the changes were implemented and communicated, and the hardship that ensued for many women. We agree with the House of Commons Work and Pension Select Committee about adequate notice being necessary to enable individuals to plan for retirement. We have doubtless all received examples of how individuals’ hoped-for retirement has been blighted by not being able to access a pension: people having to hang on to an arduous job which they struggle to undertake; individuals having given up a secure job, in the expectation of a pension, not being able to return when the pension disappears into the future; individuals taking up caring responsibilities, saving the social care system in the process; and people just being without resources, with some going abroad.
Of course, we should see this in the historic context of women who, for a variety of reasons, have done less well under the state pension, albeit that over time this will change when state pension outcomes for women should equalise with those of men more than a decade earlier, but not until—would you believe?—2040. Women are still more likely to work part time, have periods out of the labour market, take up caring responsibilities and have lower-paid jobs. With the passage of time, many will by now have reached state pension age—all doing so under the 2011 timetable—and will be in receipt of the new single-tier state pension.
A key matter in determining a fair way forward, as others have said, is to seek to understand whether communication of all these changes has been robust enough and has created a genuine awareness of the implications for those affected by the 1995 and 2011 changes. The WASPI campaign asserts that government communications have been inadequate. This issue has been the subject of review and comment by the Work and Pensions Select Committee. The committee’s conclusion is that the DWP’s direct communications with those affected by the increases in state pension age until 2009 were very limited—and just before the commencement of the changes in 2010. There were more robust personalised letters, as we heard, between 2009 and 2014, but they were seemingly sent on average just over a year before individuals reached the age of 60. The Select Committee concludes:
“We will never know how many women … could not reasonably be expected to know that their state pension age was increasing … while the last and current Governments have done more to communicate state pension age changes … this has been too little too late for many women”.
This argues in favour of some form of redress, and a variety of transitional arrangements have been proposed. These include: bridging pensions, limiting the maximum increase for waiting to one year and reducing the speed of the 2011 Act increases. Some of these carry not insignificant costs, which of course cannot be ignored.
The Labour Party proposes two transitional measures: first, return eligibility for pension credit to the SPA timetable of the 1995 pension arrangements, but with qualifying age continuing to increase to 66. It is understood that this would have a cost over 10 years of something like £800 million; secondly, an early draw-down so that individuals could draw their state pension at age 64 but with an early retirement reduction of 6% per year. So anyone otherwise entitled to a full state pension who retires at 64 would receive something like £137 per week. This option would be available to 2.6 million women with dates of birth between
We are a long way past the stage where an ideal outcome to the necessary process of equalising and increasing the state pension age could be achieved. But we consider that these proposals could go some way towards improving the lives of millions of women, and we commend them to the Government. Others have expressed incredulity that there has not yet been a meeting arranged with the WASPI campaigning team, and I urge the Government to do that. In any event, I know that my colleagues, together with those in the Commons, would be happy to do so.
My Lords, I thank the noble Baroness, Lady Scott, for introducing and securing this debate, and thank all those who have contributed. I shall do my best to respond to the various issues raised.
Work and society have changed tremendously since the introduction of the contributory state pension in 1948, and this Government believe that state pension provision should reflect this. As the demographic balance in the UK shifts, and fewer people of working age are expected to support a growing number of pensioners, it has become clear that an increase in the state pension age is necessary for the welfare of all. Underpinning this belief is the basic fact that a welfare and pensions system is only as successful as it is sustainable. Those who are able to work should support those who are not, confident in the expectation of support when they reach their own retirement. Today’s workers provide for the support of today’s pensioners, fulfilling this essential tenet of the social security system, as it has existed ever since the creation of the welfare state over 70 years ago. For this to continue, however, we must take steps to ensure that our model is fit for the future. A policy that allows each generation to spend an increasing percentage of life over state pension age, financed by an increased level of public pension expenditure, would be unsustainable in the long run and unfair to subsequent generations of taxpayers.
Women retiring today can still expect to receive the state pension for 23.5 years on average, almost three years longer than men. Even after equalising women’s state pension age with men’s, women will spend on average around two years more in receipt of their state pension because of their longer life expectancy. In response to the concerns raised during debates in both Houses on the Pensions Act 2011, we introduced a significant concession worth £1.1 billion, which ensured that no one would wait more than 18 months for their pension, when compared to the previous timetable. Any further concession would cost significantly more, and ask people of working age—more specifically, today’s younger people—to pay even more for it. It is the firm opinion of this Government that such an outcome simply cannot be justified.
Policy changes to the state pension system have been implemented over the past 22 years and supported by all three major political parties. Indeed, the noble Baroness’s party was in government when the 2011 Act was introduced, so it is disappointing that it has now chosen to distance itself from these necessary reforms, and talk about mistakes. The former Liberal Democrat Member of Parliament for Thornbury and Yate, for instance, who was Minister for Pensions under the coalition, has suggested that not enough was done to ensure that women were aware of the changes being made. We do not accept that argument. Since 1995, successive Governments have gone to great lengths to communicate changes to the state pension age. As my honourable friend in another place, the Minister for Pensions, has been clear in debates in the House of Commons, the Department for Work and Pensions has diligently communicated the timetable of these changes since they were set in train 22 years ago. This included writing to those affected by the 2011 Act throughout 2012 and 2013 to inform them of changes to their state pension age
Over the past 17 years, the DWP has provided over 19 million personalised state pension estimates. I do not think it is fair, therefore, for noble Lords somehow to suggest that these changes have been brought in by stealth. Indeed, as the noble Baroness’s friend in another place, the honourable Member of Parliament for Eastbourne, said just two weeks ago, there seems to be an “element of amnesia” to this debate.
The current arrangements represent the culmination of several decades of policy-making, to which all the major parties in this House have contributed. The noble Baroness’s party has yet to offer a clear alternative to our position. The official Opposition have outlined their ideas for potential changes to the Government’s policy and, with your Lordships’ permission, I will now address these. Noble Lords on the Benches opposite have suggested that the Government should set the pension credit qualifying age so that it precedes the state pension age as a means of compensating women affected by the changes we have discussed. While we acknowledge the good intentions that lie behind this proposal, we are clear that the unintended consequences of such a shift would render it unworkable.
Introducing a measure designed to benefit a specific group in this way would risk creating a new inequality. Any movement of the pension credit qualifying age would presumably have to be extended to cover not only women who are not affected by the 2011 Act but also men, if the Government’s actions are not be considered discriminatory. As a general point, it would also need to include housing benefit and help with council tax. If not, the proposal would risk providing money through pension credit with one hand and taking it away through higher housing costs with the other. To move women away from the working-age benefits system and the support available to them through their local jobcentre, in any case, would cause them to lose their link with the labour market, with an inevitable, negative effect on their household income and eventual pension pot. These women need support in the labour market, not exclusion from it—support that pension credit does not provide, with only a very small earnings disregard of over £5 a week.
The noble Lord, Lord McKenzie, or rather his party, has costed the option at over £800 million. However, we must also remember that the Labour Party manifesto committed to providing the 2.5 million women affected by the Pensions Act 2011 more generally with,
“some kind of compensation for their losses”.
It is not correct to say that these women have suffered losses of state pension. The position has always been that they will receive their state pension and other contributory benefits if they meet the entitlement conditions. The state pension they receive is determined under the rules in force on the date on which they meet these criteria. Making pension contributions in 1993, for instance, does not entitle someone to receive state pension according to the rules that were in force then. Paying state pension based on the pre-1995 rules, furthermore, would mean that pensioners would not receive all the additional benefits that have been introduced in the intervening years, or be protected under the triple lock.
The noble Lord opposite also suggested that we allow WASPI women early access to their state pension from the age of 64 at a reduced rate. Evidence submitted by the Government Actuary to the Work and Pensions Select Committee in April 2016, however, showed that it would be extremely complex to accurately predict the costs involved in this initiative. Within a matter of hours of suggesting it, I might add, two different versions of the policy were proposed. WASPI groups have rejected both. The introduction of a partial early payment in either form would involve bringing forward significant expenditure, even if the measure was assessed as cost-neutral in the long term. The wider impact on the economy cannot be ignored: adding even one year to people’s working lives would result in a sustained increase to GDP of over 1%—and 1% of GDP today is almost £20 billion.
The pension reforms we have undertaken have already greatly improved state pension provision for all, particularly women. Future pensioners stand to benefit not only from the introduction of the new state pension but also from the expansion of auto-enrolment and our Fuller Working Lives strategy. For many women, the new state pension is much more generous than the old system. By 2030, over 3 million women stand to gain an average of £550 extra per year as a result.
With respect, we cannot avoid the reality of the UK’s ageing population. The number of people over state pension age in this country is expected to grow by 4 million over the next 25 years, a rise of almost one-third. That is why the Government’s position remains firm and why we will not make any further concessions on this issue. Accelerating the increase in state pension age for both women and men has proved necessary in the light of increasing life expectancy and the increasing pressure on public resources. By 2035, the number of people aged 100 or over will have more than doubled. Failing to act on this evidence would not only be irresponsible but place a wholly unsustainable burden on future generations.
Our focus is to deliver a modern welfare system fit for the needs of the 21st century, which rewards work and targets support towards those who most need it. As part of this, we must ensure that the costs of an ageing population are shared out fairly. In this context, and given the financial pressures we face as a nation, we cannot, with regret, unpick a policy that has been in place for 22 years. It is simply not affordable. The average woman reaching state pension age last year will get a higher state pension income over her lifetime than at any point before. Let us celebrate the fact that longer life, better health and continued activity in later decades are reshaping the profile and participation of older people in our society. However, let us also accept that part of preparing the welfare system, and society at large, for the changes brought about by these advances must be to encourage older workers to benefit from fuller and longer working lives.